To Buy or to Rent? The Pros and Cons of Both

Renting Pros

1. No tax bills.

When homebuyers lock in their mortgage rates and budget for the future, they oftentimes forget the financial burden of property taxes. Depending on what state and county you live in, tax payments on your home can easily break the bank.

Instead, renters can save or use their hard-earned cash for other things. Young families can pay off student loan debts, build up a vacation fund, invest, or put money into their businesses. Anything is more gratifying than writing a check to Uncle Sam.

2. Pick your neighborhood.

Renters have the freedom to choose wherever they want to live. If parents can’t afford to buy a home in a top-notch school system, they can give their children a better education by renting a home or apartment in the community.

If you’re subject to constant travel or more permanent transfers due to work, renting offers convenient temporary living. It also allows you to downsize or upgrade if your lifestyle changes, such as with the birth of a child.

3. Avoid major repair and maintenance expenses.

When you lease a property, the owner or landlord is responsible for any major repairs. Whether an interior appliance or a more serious structural issue, tenants don’t normally pay for these expenses because they don’t own the home.

Houses endure everyday wear and tear, and in a short period of time, bills related to plumbing, roofing, landscaping, and other maintenance can add up.

Renting Cons

1. Your living situation is never guaranteed.

Renting has its conveniences, but signing a lease means you only have security for a short period of time. Your rent payment may increase upon expiration of the agreement, and inflation almost always affects the real estate market.

Also, when a lease period ends, tenants have no promise of renewal. If a landlord chooses to sell the property or wants you gone for whatever reason, you’ll have to uproot your life with little to no notice.

2. You always need permission.

When you reside on someone else’s property, you aren’t free to decorate and alter the home to suit your taste. Seemingly minor upgrades like a new wall color, flooring, or decor must be submitted to the landlord for approval.

A lease also puts constraints on your everyday freedoms. If you have a pet, prefer to smoke, or like to have lots of guests over, you may find your liberties restricted as a renter.

3. No capital gains.

People who rent for years–or a lifetime–are ridiculed for “throwing their money away.” When you pay a monthly sum for rented space, that money is gone forever, and you have nothing concrete to show for it.

Buying Pros

1. Great financial investment.

In most cases, buying a home has a high percentage of return on the initial investment. When you make payments on a mortgage, you’re contributing to your own long-term gains if you ever sell the property down the road.

Savvy homebuyers can fulfill their idea of the American dream while making a profit in the process.

2. Remodel as you please.

Homeowners enjoy the freedom of choice. If your family changes, you can remodel areas of your space to accommodate their needs. If you decide a wall color is outdated, you can paint it.

Depending on the renovation, proprietors can also reap the financial benefits of various improvements they make to their properties.

3. Better tax write-offs.

You may pay hefty property taxes, but when it comes to income taxes, owning a home can actually save you money.

Taxpayers who tend to owe the government money each year have access to helpful write-offs based on their mortgage payments, property tax payments, energy-efficient home upgrades, and more.

Buying Cons

1. General financial hardship.

Alongside taxes and everyday utility costs, owning a home comes with a slew of unexpected expenses. From faulty roofs to structural cracks, burst pipes to broken heating systems, a major repair job is always looming.

In many ways, renters have peace of mind knowing any substantial damage is out of their hands. Homebuyers can’t say the same.

2. Constant maintenance.

With the changing of seasons comes a variety of costs related to upkeep. Homeowners commit to continuous outdoor maintenance when they buy, including gutter cleaning, leaf and snow removal, power washing, and more.

As permanent members of the neighborhood, property owners need to beautify their space and improve curb appeal.

3. Investments come with risk.

While many homeowners make a sizeable profit in selling their homes, not everyone has the luxury of strategy. If you have to move due to a job transfer, or you simply dislike the neighborhood, you may have little freedom to pick up and go when money is on the line. In the event of a financial recession, owners are forced to stay for fear of losing their investments.

People who buy their homes during the height of an economic boom may also find it nearly impossible to make a profit due to natural changes in the market.